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Anita L. Eisthen, CFA, CPA, MBA
Anita L. Eisthen, CFA, CPA, MBA, Financial Advisor
Category: Finance
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Experience:  Investment Advisor for over 25 years. Former Big 8 Public Accounting Firm Auditor.
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What different types of business operate in the international

Resolved Question:

What different types of business operate in the international environment? Why are the techniques and strategies available to these firms different?

Need a short answer.
Submitted: 6 years ago.
Category: Finance
Expert:  Anita L. Eisthen, CFA, CPA, MBA replied 6 years ago.

Large multinational firms typically include those whose products and services can translate to a larger audience. Retailers such as Wal-Mart come to mind. Automobile companies are also able to sell a similar product in many different countries. Companies that provide personal services, such as health care, cannot move overseas because the service offered is so personal. It is impossible for a doctor in India, for example, to meet a US patient for a professional examination. Lately, service companies have moved their call centers outside of the high-cost countries, such as the US, and to other countries where wage costs are lower, such as India and the Philippines. Any product or service that can be outsourced to lower-cost countries is one that can be moved overseas. Other types of companies that can be reproduced internationally are restaurants, although with people in different countries having different tastes, the restaurant often has to adapt its offerings to the local population.

 

Techniques and strategies available to multinational firms include using currency hedging, and sourcing their products from lower cost countries, such as China, and re-selling them in countries such as the United States where the standard of living is higher. These companies can capture additional margin by producing in low-cost countries and selling in countries where they can receive a higher price. The can also use differing tax policies to their advantage -- setting up their companies so that the income generated is attributable to a lower-tax country.

 

Best wishes,

 

Anita

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